• Adjusted EPS: $2.72, up 13% from the prior year.
• Organic Growth: 9%, with strength in Electrical Americas, aerospace, and Electrical Global.
• Segment Margins: Record 23.9%, in line with guidance.
• Total Company Orders: Increased 3% versus prior quarter.
• Revenue: Record quarterly revenue of $6.4 billion.
• Electrical Americas Organic Sales Growth: 13%, driven by data center and utility end markets.
• Electrical Americas Operating Margin: 30%, up 80 basis points versus prior year.
• Electrical Global Organic Growth: 9%, with strength in data center, machine OEM, and utilities end markets.
• Aerospace Organic Growth: 13%, resulting in all-time record sales.
• Aerospace Operating Margin: 23.1%.
• Vehicle Segment Revenue: Down 15%, including an 11% organic decline.
• Vehicle Segment Operating Margin: 15.5%.
• E-mobility Revenue Growth: 2%, with 3% organic growth.
• 2025 Organic Growth Outlook: Raised by 50 basis points to a range of 7.5% to 9.5%.
• 2025 Adjusted EPS Guidance: Reconfirmed at $11.80 to $12.20.

• Warning! GuruFocus has detected 5 Warning Signs with APLE.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Eaton Corp PLC (NYSE:ETN) reported a record Q1 adjusted EPS of $2.72, up 13% from the previous year.
• The company achieved 9% organic growth, with notable strength in Electrical Americas, aerospace, and Electrical Global segments.
• Eaton Corp PLC (NYSE:ETN) delivered Q1 record segment margins of 23.9%, aligning with their guidance.
• The company has a strong backlog and a book-to-bill ratio of 1.1, indicating robust future demand.
• Eaton Corp PLC (NYSE:ETN) raised its expectations for organic growth and reaffirmed its adjusted EPS, cash flow, and share repurchase guidance for 2025.

Negative Points

• The Vehicle segment experienced a 15% revenue decline, primarily due to weakness in commercial and ICE light motor vehicle markets.
• The company faces uncertainties from the dynamic global trade environment, including tariff impacts.
• Eaton Corp PLC (NYSE:ETN) lowered its 2025 segment margin guidance by 40 basis points due to commercial actions offsetting tariff impacts.
• The Electrical Americas segment saw a 4% decline in orders on a rolling 12-month basis due to tough comparisons from a large multiyear order in Q1 2024.
• The company anticipates a slight decline in internal combustion engine light vehicle growth, adjusting its forecast from slight growth.

Q & A Highlights

Q: Can you provide some color on the data center market performance in Q1 and expectations for the rest of the year? A: Paulo Sternadt, President and COO, highlighted that the data center market remains strong, with Q1 showing very strong double-digit growth, surpassing the 45% growth from last year. The fundamentals remain robust, and Eaton is optimistic about continued high-level orders and negotiation activity. The recent Fiber Bond acquisition is expected to enhance Eaton's position as a one-stop shop for data center power solutions.

Q: How is Eaton positioned in the US market following the Trump 2.0 tariffs, especially with EU competitors and increased capacity from Asian competitors? A: Paulo Sternadt explained that Eaton has a significant advantage due to its extensive US footprint and local manufacturing strategy, which minimizes reliance on external sources. This local-for-local strategy positions Eaton well against competitors who serve the US market from Europe. Eaton's recent capacity expansions further strengthen its competitive position.

Q: What is the outlook for Electrical Americas orders for the rest of 2025? A: Paulo Sternadt stated that orders are expected to remain strong, supported by record backlogs and robust negotiation pipelines. The negotiation pipeline is up 18% from the previous quarter, with significant increases in data centers and industrial sectors. Despite some declines in commercial buildings and transportation, the overall pipeline provides strong confidence in future orders.

Q: Can you discuss the implications of the data center backlog extending from seven to nine years? A: Paulo Sternadt noted that while the backlog indicates strong demand, the industry will likely find ways to accelerate construction. Eaton's modular solutions and broad portfolio position it well to help data center operators improve design efficiency and speed. The company is actively engaging with customers to optimize designs and capitalize on this long-term growth opportunity.

Q: How is Eaton addressing the impact of tariffs, and what are the expected effects on margins? A: Paulo Sternadt emphasized that Eaton is actively managing tariff impacts through cost management, supply chain actions, and pricing strategies. Although there is a short-term margin impact, Eaton is committed to recovering costs on a dollar-for-dollar basis over the year. Olivier Leonetti, CFO, added that the company expects to recover margins over time, though not within the current year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.